Companies:

RELATED QUOTES

The Government has scrapped the bidding competition for the Great Western rail
franchise and triggered a potential row with the industry by refusing to
compensate bidders.

• Great Western bid cancelled
• Essex Thameside franchise bid to resume in the summer
• Thameslink/Southern pushed back two years
• Goverment says companies responsible for their costs

Just months after it pulled the contract for the West Coast Main Line, costing
the taxpayer more than £50m, the Department for Transport has awarded an
extension to FirstGroup (LSE: FGP.L - news) , which currently runs the services connecting London
to Bristol and Cardiff.

The Great Western competition was one of three franchise bids put on hold last
October after the fiasco over the flawed awarding of the West Coast Main
Line franchise. The others were Essex Thameside and Thameslink/Southern.

Patrick McLoughlin, the Transport Secretary, made clear on Thursday that he
does not envisage payments to the companies involved.

"In keeping with the relevant invitations to tender, which made clear
that bidders are responsible for their own costs, the Secretary of State
does not believe it would be appropriate to reimburse bidders," he said
in a statement ,

This is likely to anger bidders who have already incurred costs on the bid.
Those shortlisted for the Great Western franchise were FirstGroup, National
Express (NYSE: EXPR - news) , Stagecoach, and Arriva (LSE: ARI.L - news) .

The current Great Western franchise will now run until October after the
Department of Transport exercised its right to extend the current contract
with First Great Western by 28 weeks. It will now enter talks for an
additional two-year contract with longer-term proposals to be set out in the
spring

An extension on the Great Western line is a significant boost to FirstGroup
after it was named as the winner of the West Coast competition in August -
only to be denied the franchise two months later when the Government aborted
the process, following the discovery of “significant technical flaws” in the
way the process was handled.

The unprecedented suspension of the rail bidding process in October threw the
rail franchising system into chaos, with nine major contracts due to expire
by the end of 2014.

The DfT said the competition for the 15-year Essex Thameside franchise would
be resumed in the summer. In the meantime, an extension of up to two years
is to be negotiated with current operator National Express (LSE: NEX.L - news) .

While the Thameslink, Southern and Great Northern franchise competitions will
be pushed back by around two years, with the aim of issuing a seven-year
contract. The current Thameslink contract is to be extended to bridge the
gap.

Mr McLoughlin said: "These plans mark an important step on the way to
restarting the franchising programme, and while I am determined this should
happen as quickly as possible we do need time to get this right.

"We have had to take some tough decisions regarding franchising, and
while they may provide a challenge in the short term, I believe the lessons
we have learnt will help deliver a more robust system in the future
benefiting fare-payers and taxpayers alike.

"As always our priority is to ensure these changes will not impact on
services or our commitment to improving the railways. Our latest step
towards delivering a high-speed rail network which will link many of our
major cities by a new fleet of state-of-the-art trains is testament to how
we are delivering on that commitment."

Minister to blame for West Coast fiasco

The news comes as transport ministers were blamed by MPs for a series of
“irresponsible decisions” that led to the West Coast debacle.

Ultimate responsibility for the fiasco lies with Government ministers, who
pressed ahead with a “complex” and “perhaps unworkable” franchising policy
“in haste”, according to a committee of MPs.

A report from the Commons Transport Select Committee points the finger firmly
at ministers, who have so far allowed DfT officials to shoulder most of the
blame.

The select committee stops short of naming individual ministers but the
findings put former Transport Secretary Justine Greening, her predecessor
Philip Hammond and former Transport Minister Theresa Villiers in the frame.

Louise Ellman, chair of the transport committee, said: “Embarking on an
ambitious - perhaps unachievable -reform of franchising, in haste, on the
UK’s most complex piece of railway was an irresponsible decision for which
ministers were ultimately responsible.”

The committee said that money which could have been spent on transport
projects had instead gone to consultants, lawyers and review teams, on work
which achieved nothing, and compensated train operators for the DfT's "incompetence".

"Many of the problems with the franchise competition, detailed in the
Laidlaw report, reflect very badly on civil servants at the DfT. However,
ministers approved a complex, perhaps unworkable, franchising policy at the
same time as overseeing major cuts to the Department's resources. This was a
recipe for failure which the DfT must learn from urgently."

A DfT spokesman said: "Following the collapse of the West Coast
refranchising programme, the Department for Transport was subject to two
independent inquiries and an internal HR investigation. These have now
concluded but the disciplinary process is ongoing."

Bob Crow, leader of the Rail, Maritime and Transport union, said: "The
day the lid was lifted on the sordid fiasco on the West Coast the Government
are at it again, doling out lucrative two-year contract extensions around
the country with directly operated railways on hand to sweep up the mess if
it all falls apart.

"The lies, deceit and racketeering of rail privatisation has to be called
to a halt now."

Yahoo UK & Ireland Finance

Also On Yahoo

Quotes are real-time for NASDAQ, NYSE, and NYSEAmex when available. See also delay times for other exchanges. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.